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ARTICLE · 31 AUGUST 2020

Interest Awarded By Arbitrators In Multi-Currency Claims – Compensatory Not Punitive

The Supreme Court in Vedanta Ltd. v. Shenzhen Shandong Nuclear Power Construction Co. Ltd. has provided salutary guidance to arbitrators regarding the grant of interest in both pre-award...

IndiaLitigation, Mediation & Arbitration

Introduction

The Supreme Court in Vedanta Ltd. v. Shenzhen Shandong Nuclear Power Construction Co. Ltd.1 has provided salutary guidance to arbitrators regarding the grant of interest in both pre-award and post-award situations. Arbitral tribunals are reminded by the Court that the rate of interest awarded should be compensatory and not punitive in nature.

Facts

Vedanta Ltd. (the Appellant), a company incorporated in India, entered into four inter-related contracts (EPC Contracts) with Shenzhen Shandong Nuclear Power Construction Co. Ltd. (the Respondent), a company incorporated in the People's Republic of China, for the construction of a power plant in India. The EPC Contracts provided for Indian seated arbitration but made no provision for payment of interest on delayed payments.

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